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ARI Ups Greenbrier Offer, Sets Friday Deadline

December 20th, 2012

Merger talks between railcar firms American Railcar Industries and Greenbrier took another dramatic turn on Dec. 19 with some “confusion,” a new offer and a deadline.

In an unusual letter written by Daniel A. Ninivaggi, president & CEO of Icahn Enterprises L.P., to Greenbrier President Bill Furman, ARI said it was “very confused” by a press release from Greenbrier that indicated that ARI’s $20 per share offer grossly undervalued Greenbrier. In the letter written on behalf of the ARI board and its chairman, Carl C. Icahn, he noted “last weekend, your investment banker contacted me and encouraged American Railcar to make an offer to acquire Greenbrier. He stated that the Greenbrier board would seriously entertain an offer of between $20 and $22 per share, and there was substantial support on the Greenbrier board for a transaction in that price range.”

As a result, American Railcar made an initial cash offer of $20 per share, in a negotiated transaction worth about $543 million. “I personally read the language of the offer and our required legal disclosure to your investment banker and asked that it be communicated to Greenbrier management and to you (Bill Furman) personally before it was publicly disseminated. I was assured by your banker that it had been. We would never have made the offer had we not believed that we had your support and the support of a substantial number of directors for a transaction in the price range we discussed. That is why we are extremely perplexed by your press release. It is completely inconsistent with what we were led to believe by your investment banker,” Ninivaggi said.

ARI also said it disputes Greenbrier’s claim that its $20 per share offer “grossly undervalues” Greenbrier. On the day before the disclosure of American Railcar’s ownership interest in Greenbrier, the company’s stock closed at $13.95 per share. And in the company’s last earnings release, Greenbrier disclosed that fiscal 2013 railcar deliveries are forecasted to decline by 13-23 percent from 2012 levels and Greenbrier’s stock price declined by 23 percent during the days following the release.

ARI is willing to acquire Greenbrier at a price of $22 per share, payable in cash, in a negotiated transaction. The offer price represents a 57 percent premium to the closing price of Greenbrier’s stock on the day before American Railcar disclosed its ownership interest in the company and a 46 percent premium to the volume weighted average price of Greenbrier stock during the 30 trading day period prior to such date. American Railcar’s offer represents full value for Greenbrier and will not be increased, according to Ninivaggi.

“We have spent the past several weeks discussing strategic opportunities involving American Railcar and Greenbrier, and it is time that we bring this process to a conclusion. We will hold our proposal open until 2:00 p.m. (eastern) on Friday, December 21st.  If Greenbrier’s board does not wish to proceed on this basis, we will move on to other endeavors and abandon any efforts to complete a transaction. All we ask for is a yes or no answer. We do not wish to have a counter-offer,” according to the letter.

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